With the rapid growth of the cryptocurrency market in 2021, the composition of Bitcoin holders has greatly changed, and the market faced a major wave of new retail traders and investors who, for now, control the price of the cryptocurrency.
Holder composition is changing
According to Blockware lead analyst Will Clementine, the short-term holder supply has reduced significantly, which could be a reason for the almost complete absence of both selling and buying volumes on the market.
Previously, Three Arrow Capital founders shared data on the share of U.S. citizens that own cryptocurrency. As the data suggests, 20% of all U.S. adults and 61% of all millennials with incomes over $100,000 report holding cryptocurrency. With such a large number of citizens holding some form of digital assets, the next wave of retail traders that enter the market might be the last “fresh funds” income.
Long-term holders
As for long-term holders, the movement of the supply on wallets that hold Bitcoin or other cryptocurrencies for more than 155 days usually stays relatively low and does not affect the market - compared to short-term holders who move their assets actively.
During a “weak” market cycle when the majority of assets on the market enter a correction phase, the long-term holdings tend to increase as more whales prefer holding or accumulating funds. As the analyst suggests, the increase in the long-term supply also increases due to the majority of new traders preferring to hold through correction cycles.
At press time, Bitcoin is trading at $43,440 and going through a 1% drop following another risk-off cycle on global financial markets.